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Retrospective tax law is bad, says professional

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‘Section 38 on Deemed Assessed Value could infringe on tax payers’ rights’

by Sanath Nanayakkare

Speaking at a Webinar held on the 2nd June 2021.on “Recent Amendments to the Inland Revenue Act” Shamila Jayasekara Partner – Head of Tax & Regulatory said that in principle, retrospective tax law was bad as it could have negative consequences on the concluded transactions of businesses.

Sharing her concerns and views on the topic she said,” A lot of changes made to the tax code are incentives provided through the form of tax exemptions, the concessionary rate being applied to a large number of sectors, the qualifying payments allowed and expanded, the withdrawal of withholding taxes, the expansion of deductible tax expense”.

“Those were the plus factors of the tax proposals to give relief to businesses. Now, they are retrospective. Some of the agriculture tax excemptions come in from April 2019 and the others from January 2020. so we need certain clarifications and guidelines to be issued by The Inland Revenue Department fast, so we can implement them during this month. Then as practitioners, we can amend returns that have already been submitted and filed.”

“Another area I want to bring is another area is; there were certain changes that were done which were not budget proposals and which were not announcements in press statements either with retrospective effect going back to April 2018. Now in principle, I think retrospective tax law is bad, but in circumstances when certain incentives were given and published, then of course you become aware of these changes though the law may not be there. But it should not hit you as a surprise when you read the tax amendments because these have consequences to concluded transactions of businesses. I don’t think it is positive from the tax side where you suddenly find you have concluded a transaction and then you find the tax law has changed with retrospective effect. What has happened has happened but it should not happen. I understand that even in the current amendments there are gaps. If you take concessions given to SMEs, I think there is a bit of doubt as to what an SME is. I understand these changes and I know that the policymaker can change those, but those should be done prospectively. It should not be a retrospective change because tax law is a fiscal law and no one would know the thinking behind policies ,so you go on the wording of the law, therefore, any change should be prospective’

“Further, the introduction to section 38 of a deemed assessed value on the realization of investment assets; you are to consider it on the market or an assessed value or the value given by a valuer.. But if the commissioner is of the view that is not reflective of market value then he can determine an alternate value. I think that gives a lot of room for arbitary valuations and a lot of disputes. With regard to this section, there is no penal code either because the law empowers the determined value to be accepted as the assessed value. That will of course infringe on the tax payers rights,” she said.



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U.S. confident SL would ensure required facilitation for U.S. investors

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Sri Lankan government has pledged to address the pending policy issues and I am confident that once the pandemic subsides, concrete efforts will begin to improve ease of doing business and ensure the required facilitation for US investors, Martin Kelly, Charge d’ Affairs of the Embassy of the United States of America in Sri Lanka said recently speaking at the Sri Lanka Invest Forum 2021 held virtually through June 7-9, 2021

“Sri Lanka was among the first countries in the region to open its economy and offers the highest standards of living among other advanced indicators in South Asia. Over the last seventeen years, the country continued to transition from an agriculture commodity based economy to become world leader in textile and apparel, a major exporter of IT and communication related services and of course a world class destination for international tourists,” he said.

“Promoting trade and investment opportunities is one of the embassy’s top priorities, and a vital component of our efforts to encourage private sector led development and toward stronger ties between the two countries,” he said.

Kelly said that the government of Sri Lanka has promoted pro-business policies including tax benefits, to attract the U.S. and other foreign direct investments.

 

 

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ComBank donates ICU beds to Kegalle Teaching Hospital

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Commercial Bank Chairman Justice K. Sripavan and Managing Director S. Renganathan with representatives of the Bank and the Kegalle Hospital

The Commercial Bank of Ceylon has donated three Intensive Care Unit (ICU) beds to the Teaching Hospital Kegalle, which receives over 80,000 admissions and 350,000 clinic visits, annually. The donation was made following a request from the hospital and will help it to provide seamless healthcare services to prevent non-pandemic related morbidities and mortalities while also treating patients who are COVID-19 positive.

The CSR Trust of the Bank has already gifted medical equipment and gear including Personal Protection Equipment (PPE) kits, face masks, surgical masks, hand sanitisers, Slit lamps, pulse oximeters, multipara monitors and oxygen concentrators to over 16 government hospitals. Commercial Bank also made a monetary donation to the National COVID-19 Healthcare and Social Security Fund set up by the government last year.

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Trading activity gets slower among retail investors

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Lankem Ceylon Rights Issue undersubscribed.

By Hiran H.Senewiratne 

Stock trading at the Colombo Stock Exchange (CSE) was marginally positive yesterday and the number of retail investor participation was lower compared to previous trading days. Index heavy LOLC group which accounted for more than 30 percent of the turnover, contributed 20 points to the All Share Price Index, stock market analysts said.

Both indices moved upwards. All Share Price Index was up by 35.75 points and S&P SL20 up by 2.01 points. Turnover stood at Rs 1.74 billion sans a single crossing. In the retail market top six companies that mainly contributed to the turnover were LOLC Rs 510 million (1.28 million shares traded), Expolanka Holdings Rs 197 million (4.1 million shares traded), Melstacorp Rs 137 million (2.6 million shares traded), Browns Investments Rs 71.5 million (11.3 million shares traded), Windforce Rs 68.2 million (3.5 million shares traded) and Hayleys Holdings Rs 54.8 million (730,000 shares traded).

Index heavy LOLC, which contributed 20 points to the All Share Price Index, appreciated its share price by Rs 18.75 or 4.85 percent. Its share price started trading at Rs 386.25 and at the end of the day it moved up to Rs 405.

A pioneer in renewable energy, Vidullanka PLC has successfully completed raising additional capital of Rs. 253 million to fuel its expansion drive in the solar power sphere.

Lankem Ceylon Plc, Rs. 677 million worth Rights Issue has been undersubscribed. When the issue closed the Company managed to draw only subscriptions for 17.6 million shares worth Rs. 352.3 million. The original plan was to issue 33.85 million shares at Rs. 20 each aiming at raising Rs. 677 million. The basis was one new ordinary share for every one share held. Funds were to be raised to augment working capital requirements.

During the day 67.9 million share volumes changed hands in 17564 share transactions.

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